Indonesia's Cheap Wages Regime: The Political Economy of Minimum Wages Policy under Jokowi Presidency

Indonesia's new wage policy mechanism made a new history since Joko Widodo (Jokowi) became President. The first minimum wages policy in Indonesia was implemented in 1969 in which the determination comes from society's monthly necessities through a discussion involving labor, employer, and state, it is known that the determination is no longer using aforementioned variables but it is rather based on a market-standard formula. This paper exploring the logic political-economic of wage policies implementation based on neoliberalism in the first presidency of Jokowi, which has implications for affirming cheap wages policies. This research uses a qualitative method by comparing two regions with different economic bases, namely Bekasi as the largest industrial area in Southeast Asia and Yogyakarta as the province with the highest national economy inequality and the cheapest national minimum wage representation. The findings of this research show that this new wage formulation is emerged from the ideology of corporatism that takes place in every power transfer process and has the implication of reinforcing wage inequality that occurs in the local context in Indonesia. Politically, this regulation eliminates the democratic mechanism in the form of tripartite through a survey of monthly necessities which is carried out by labor, government and employer every year and has divided the strength of trade unions in fighting for the determination of decent wages.